Transcript File
GOODS AND SERVICES TAX
(GST)
CONCEPT, MODEL & PRESENT STATUS
January, 2015
PRESENTATION PLAN
Why GST : Perceived Benefits
Road to GST – Milestones
Stakeholders
Existing Indirect Tax Structure
Features of Constitution Amendment Bill
Features of Proposed GST Model
Current Status
GSTN
Way Forward
GST Planning
WHY GST?
PERCEIVED BENEFITS
WHY GST : PERCEIVED BENEFITS
To Trade
Reduction in multiplicity of
taxes
Mitigation of cascading/
double taxation
More efficient neutralization
of taxes especially for exports
Development of common
national market
Simpler tax regime with fewer
rates and exemptions
To Government
Simpler Tax system
Broadening of Tax base
Improved compliance &
revenue collections (tax
booster)
Efficient use of resources
ROAD TO GST - MILESTONES
ROAD TO GST- MILESTONES
Budget 2006-07: announcement of intent to introduce GST by 2010
May, 2007 to September, 2009: Discussions on roadmap & design
between Empowered Committee of State Finance Ministers (EC) & GOI
November, 2009: First Discussion Paper (FDP) released by EC
January, 2010: Comments on FDP by GOI
June, 2010 : Three sub-working Groups constituted by GOI
o
Registration, return, payment, refund, audit & dispute
resolution mechanism related issues
o
Drafting of Central GST & model State GST legislations
o
Basic design of IT systems required for GST in general &
IGST in particular
ROAD TO GST- MILESTONES
CONTD.
July, 2010: Empowered Group on IT Infrastructure set-up
March, 2011: Constitution (115th Amendment) Bill introduced
in LS – Since lapsed with dissolution of LS
November, 2012: Committee on GST Design set-up by EC
January, 2013: Report submitted by Committee on GST Design
February, 2013: Three Committees constituted by EC -
Dual Control, Thresholds and Exemptions
RNRs for SGST & CGST and Place of Supply Rules
IGST and GST on Imports
March, 2013 – GSTN incorporated as a Section 25 Company
ROAD TO GST- MILESTONES
CONTD.
June, 2013: Committee to draft model GST Law
July, 2013: Report submitted by Sub-Group-I on Business Processes
April, 2014: Committee to examine Report of the sub-Group-I on
Business Processes constituted by EC
June, 2014: Report submitted by Committee on IGST and GST on
Imports
June, 2014: Report submitted by Committee on Dual Control,
Thresholds & Exemptions
October, 2014: Report submitted by Committee on RNRs & Place of
Supply Rules
December, 2014: Constitution (122nd Amendment) Bill introduced in
LS
STAKEHOLDERS .
Two major players: Centre & States
Empowered Committee of State Finance Ministers (EC) Finance Ministers of all State Governments.
Assisted by State Finance Secretaries/ Commissioners of
Commercial Taxes
Government of India Department of Revenue
CBEC
Other Stakeholders – not directly involved in discussions
EXISTING INDIRECT TAX STRUCTURE
EXISTING INDIRECT TAX STRUCTURE
Present Tax
Structure
[4 Important
Constituents]
Excise Duty
Service Tax
Sales Tax / VAT
Customs Duty
Entry No. 84,
List I, Schedule
VII
Residuary Entry
No. 97, List I,
Schedule VII
Entry No. 54 of
List II (VAT) and
92A of List I
(CST)
Entry No. 83,
List I, Schedule
VII
Taxable Event is
Manufacture
Taxable Event is
Provision of
Service
Taxable Event is
Sale
Taxable Event is
Import & Export
11
FEATURES OF CONSTITUTION
AMENDMENT BILL
FEATURES OF CONSTITUTIONAL AMENDMENT BILL
122nd Amendment Bill introduced in LS on 19.12.2014
Key Features
Concurrent jurisdiction for levy of GST by the Centre and
the States –proposed Article 246A
Authority for Centre to levy & collection of IGST on
supplies in the course of inter-State trade or commerce
including imports – proposed Article 269A
Authority for Centre to levy non-vatable Additional Tax –
to be retained by originating State
GST defined as any tax on supply of goods or services or
both other than on alcohol for human consumption –
proposed Article 366(12A)
FEATURES OF CONSTITUTIONAL AMENDMENT BILL
CONTD.
Key Features contd.
Goods includes all materials, commodities & articles –
Article 366 (12)
Services means anything other than goods – proposed
Article 366 (26A)
Goods and Services Tax Council (GSTC) - proposed Article
279A
To be constituted by the President within 60 days from the coming
into force of the Constitutional Amendments
Consists of Union FM & Union MOS (Rev)
Consists of all State Ministers of Finance
Quorum is 50% of total members
Decisions by majority of 75% of weighted votes of members
present & voting
1/3rd weighted votes of Centre & 2/3rd of all States together
FEATURES OF CONSTITUTIONAL AMENDMENT BILL
CONTD.
Key Features contd.
Council to make recommendations on
Taxes, etc. to be subsumed in GST
Exemptions & thresholds
GST rates
Band of GST rates
Model GST Law & procedures
Special provisions for any special category States
Date from which GST would be levied on petroleum products
Council to determine the procedure in performance of its
functions
Council to decide modalities for dispute resolution arising out of its
recommendations
Changes in entries in List – I & II
Compensation for loss of revenue to States for five years
FEATURES OF PROPOSED GST
MODEL
GST - FEATURES
Destination-based Taxation
Applies to all stages of value chain – primary, secondary &
tertiary including retail
Applies to all supplies of goods / services (as against
manufacture, sale or provision of service) made for a
consideration except :
Exempted goods / services – common list for CGST & SGST
Goods / services outside the purview of GST
Transactions below threshold limits
Dual GST having two concurrent components :
Central GST levied & collected by Centre
State GST levied & collected by States
GST – FEATURES
CONTD.
CGST and SGST on intra-State supplies of goods /
services in India
IGST (CGST + SGST) applicable to
Inter-State supplies of goods / services in India
Inter-state stock transfers of goods
Import of goods and services
IGST levied & collected by the Centre
Additional Tax not exceeding 1% on inter-state
supply of goods – to be levied by the Centre but
retained by originating State
Export of goods and services – Zero rated
GST – FEATURES
CONTD.
All goods or services likely to be covered under GST
except:
Alcohol for human consumption - State Excise + VAT
Electricity - Electricity Duty
Real Estate - Stamp Duty + Property Taxes
Petroleum Products – to be brought under GST from a
later date on recommendation of GSTC
Tobacco products – under GST + Central Excise
GST - FEATURES
CONTD.
TAXES PROPOSED TO BE SUBSUMED
Central Taxes
State Taxes
Central Excise duty (CENVAT) State VAT / Sales Tax
Additional duties of excise
Central Sales Tax
Excise duty levied under Purchase Tax
Taxes (Centre, State or local levies – in the nature of
Medicinal
&
Toiletries Entertainment Tax (not levied
indirect
taxes
services) to be
Preparation
Act on supply of goods
by localor
bodies)
subsumed
Additional within
duties GST:
of customs Luxury Tax
(CVD & SAD)
Entry Tax (not levied by local
Service Tax
bodies)
Surcharges & Cesses
Entry Tax in lieu of Octroi
Taxes on lottery, betting &
gambling
Surcharges & Cesses
GST – FEATURES
CONTD.
GST Rates – based on RNR : Four rates Merit rate - essential goods & services
Standard rate - goods & services in general
Special rate - precious metals
Nil rate - exempted goods or services
Floor rate with a small band of rates for standard rated goods /
services for CGST & SGST
Optional Threshold exemption in both components of GST
Optional Compounding scheme for taxpayers having taxable
turnover up to a certain threshold above the exemption
GST – FEATURES
CONTD.
ITC of CGST for CGST & SGST for SGST - no cross
utilization
ITC of IGST allowed for payment of IGST, CGST & SGST in
that order
ITC of CGST allowed for payment of CGST & IGST in that
order
ITC of SGST allowed for payment of SGST & IGST in that
order
No ITC of Additional Tax
GST – FEATURES
Multiple statutes – one for Centre & one for every State
Model GST Law including Rules & procedures to be recommended by GST
Council
CONTD.
Certain features to be common between the Centre & the States &
across the States
Certain other features may vary to allow flexibility to the Centre & the
States
Place of Supply Rules
to determine Place of Supply of goods or services
to determine whether the supplies are intra-State or inter-State
HSN Code likely to be used for classification of goods
Present system of classification of services likely to be used
CURRENT STATUS
CURRENT STATUS
I.
AMENDMENT BILL REINTRODUCED on 19.12.2014
Procedure for passage of Constitutional Amendment Bill
May be referred to the Standing Committee on Finance (SCF)
To be passed by 2/3rd majority in both Houses of Parliament
To be ratified by at least 50% of the State Legislatures
Assent by President of India
Thereafter, GSTC to be constituted
GSTC to recommend GST Law and procedure
GST Law to be introduced in Parliament/ State legislatures
CURRENT STATUS
CONTD.
DRAFTING OF LEGISLATION
II.
III.
Committee & three sub-committees of officials (Centre & States)
constituted to finalize model legislation (CGST, SGST and IGST)
GST Cell in CBEC
BUSINESS PROCESSES AND IT FRAMEWORK
IT Infrastructure for GST to be put in place jointly by the Centre &
States
Empowered Group headed by Dr. Nandan Nilekani finalized the
design and modalities of GSTN
NSDL appointed the Technology partner
GSTN established as a SPV & Section 25 company
CURRENT STATUS
CONTD.
Business Processes A common portal - GST Network (GSTN) to
handle registration of taxpayers, return filing
and payments
To be linked to the CBEC IT system (ACES) &
each of the States at the back end
Business processes & forms relating to
Registration & Returns under approvals
Issues under Discussion
Key Policy issues
Key Business processes
CURRENT STATUS
CONTD.
Five Committees constituted by EC
Committee on Dual Control, Thresholds & Exemptions
Committee on Revenue Neutral Rates for State GST & Central GST &
Place of Supply Rules
Committee on IGST & GST on Imports
Committee for drafting Model GST Law
Committee for examination of Business Processes
CURRENT STATUS
CONTD.
Key Policy Issues under Discussion –
Extent of Dual Control
Rate structure
Exempted Goods / Services
Exemption threshold
Composition threshold
Role of Centre / States in inter-State Trade
Place of Supply Rules for Goods / Services
Mechanics of IGST model
Account settlement between Centre & States under IGST
model
CURRENT STATUS
CONTD.
Key Business processes under Discussion –
Single / Multiple registration within one State
Dispute settlement
Audit
Enforcement
Recovery & Refund, etc.
GST NETWORK (GSTN)
GSTN - FEATURES
GSTN incorporated on 28.03.2013 as Section 25 private
limited company with authorized equity of Rs. 10 cr.
Strategic control to remain with Government
A self-sustaining revenue model - to levy user charges for
availing services from
tax payers
tax authorities
Exclusive national agency responsible for delivering
integrated Tax related services involving multiple tax
authorities
Equity Holders
Central Government - 24.5%
EC and all States together - 24.5%
Financial Institutions – 51%
GSTN - FUNCTIONS
GST Common Portal to be set-up before GST roll out
Common Portal to function as pass-through portal for dealers to
submit registration application
file returns
make tax payments
Registration, return & payment information to be passed on to
Central & concerned State tax authorities
GSTN to develop back-end modules like Assessment, Audit,
Refunds, Appeal, Enforcement & tax payer profiling utility, etc. as part of Cafeteria Services
Statutory functions like assessment, enforcement of tax laws,
settlement of disputes etc. to be performed by the respective tax
authorities only
GSTN to provide various services
GSTN - SERVICES
Common Registration, Return filing & e-Payment for tax
payers
Integration of Common GST Portal with existing tax
administration systems of Central / State Governments &
other stake holders
Facilitate, implement and set standards for providing services
to tax payers through common GST portal
Build efficient & convenient interfaces with tax payers to
increase tax compliance
Assist tax authorities in plugging tax evasion & improving
transparency of tax administration system
Carry out research, study best practices & provide training to
the stakeholders
Deliver any other service of relevance to Government &
other stakeholders
WAY FORWARD
WAY FORWARD
Passage of Constitution Amendment Bill
GSTC to be constituted after passing of Constitution
Amendment Bill
GSTC to recommend GST Law & procedure
GST Law to be introduced in Parliament / State legislatures
Scale up existing IT Infrastructure
Linkage of GSTN portal with ACES at back end
WAY FORWARD
CONTD.
Meeting implementation challenges :
Effective coordination between Centre & State tax
administrations
Reorganization of field formations
Augmentation of human resources
Spreading Accounting Literacy
Developing IT skills
Reorganisation of Audit procedures
Harmonization of processes & procedures between CGST
/ IGST & SGST Law
GST PLANNING
IMPACT AREAS FOR BUSINESSES
Pricing,
Costing, Margins
Supply-chain management
Change in IT systems
Treatment of tax incentives
Treatment of excluded sectors
Transaction issues
Tax compliance
ROLE OF PROFESSIONALS
Tracking GST development
Review of draft legislation and impact
analysis
Industry advocacy
Review of final legislation and impact
analysis
Implementation assistance
Post implementation support
THANK YOU !